If you want to grow your online store, you’re going to need to increase your average order value.
Whether you’re just starting out or have been running an online store for quite some time, you will eventually notice an average order value, which for many stores, is on the low side.
What you don’t want is for your revenue to become static – you want to keep growing. Yes, you could find ways to drive more traffic to your store to generate more sales or you could look at ways to increase your average order value.
Average order value, or AOV, is the average amount of money that customers spend per transaction. You can calculate AOV by dividing your total revenue with the total number of orders for that same period.
For example, if your store generated $2,000 over the last month and received a total of 21 orders, your AOV would be $95.24.
Some of the other metrics that online store owners may also want to look at are the average basket value, which looks at the average number of items that are sold per transaction, and customer lifetime value, which indicates how much a customer will be worth throughout their relationship with your business.
Average order value is a primary ecommerce KPI as it helps to highlight customer behaviour and buying preferences, both of which are important for growing an online store. Knowing your AOV will help you optimise your website and pricing and guide your product choices.
AOV can also be linked to your marketing budget, ensuring you are one step closer to achieving the best possible ROI. By investing your time and effort in very specific tactics, it increases the chances of new and existing customers spending more with every order.
With this being though, AOV cannot be viewed in isolation – it’s also important to consider other key metrics such as customer lifetime value and acquisition costs.
Now that you have a better understanding of the basics, here are a few suggestions that will help you increase your AOV.
Most shoppers are only going to focus on the items that brought them to your store in the first place. If you want to increase your AOV, you’re going to need to show them what else you have to offer and recommended products are one way to do this. Instead of bombarding with additional products on their way to the checkout, simply show them recommended products based on the current product they’re interested in. You can either add recommended products to your product pages or to your cart pages.
Offering discounts is another way to incentivize customers to spend more but make sure it’s worth your while but setting a minimum order. You can either offer free shipping for orders over a specific amount or you could offer incremental discounts the more a customer spends.
Use shopper browsing history to remind customers about the products they recently viewed. When customers get wrapped up in browsing many different products, they can often forget about the items that really caught their eye. Add a Recently Viewed bar to your product pages as a subtle reminder of all the great products you stock.
Price anchoring is a psychological tactic that can be used in two different ways. The first is to show the products with the highest prices first, which will make the prices of your other items seem far more reasonable. The second is to surround your higher ticket items with low-priced products, which will emphasise the value of your lower-priced products.
While this is very similar to offering product recommendations, product bundles pair several different items together, giving customers the option of buying them all at a discounted rate. Not only do they now not need to do any research about which products they should be buying together but you’ve attached a great price to the bundle too, making this an obvious purchase decision. If you want to take things one step further, give customers the option to customise their bundles. For example, if you’re offering a bundle that includes a tent, sleeping bag and camping chair, give customers the option to upgrade their tent to something bigger or their sleeping bag to something warmer.
FOMO is still alive and well and time-sensitive offers feed directly into this human need. Whether you open up an exclusive offer to your newsletter subscribers first or only offer a discount to the first 50 customers, adding a time limit to your offers will automatically make them much more appealing.
According to a study by Reevo, online product or customer reviews were capable of increasing sales by 18%. When you’re considering buying a new product, isn’t it always more reassuring when you see other people raving about how great it is? Social proof is incredibly powerful and can make a difference in how willing a customer is to head to the checkout. Make sure that customers can easily find product reviews on every product page to help them reach a decision more quickly.
Increasing your average order value won’t happen overnight but taking the time to apply these basic tactics is definitely worth the effort.